The Basis on a Futures Contract Is Defined As

question 56

Multiple Choice

The basis on a futures contract is defined as:

• A) the cash price minus the forward price.
• B) the forward price minus the cash price.
• C) the futures price minus the cash price.
• D) the cash price minus the futures price.
• E) None of the above.

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Definitions:

Foreland Basin

A foreland basin is a structural depression that forms adjacent to a mountain range due to flexural subsidence, filling with sediments eroded from the associated orogeny (mountain-building process).

Back-Arc Rifting

A geological process in which the crust behind a volcanic arc stretches and thins, often leading to the formation of a new ocean basin.

Michigan Basin

A geological basin in the United States characterized by layers of sedimentary rock, indicative of its history as an ancient sea bed.

Continental Rifting

The process by which a continent stretches and splits along a linear belt, leading to the formation of new oceanic crust.